PHILIPPINES RATTAN VALUE CHAIN STUDY - About the Philippines

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Figure 3: Gross Output Values Rattan gatherers (community members) 53.75 million (M) poles 13% 54% 33% People’s organizations 6.99M Kapatas 29.03M 73% 27% 91% 9% Permittees/RCC holder 44.15M 80% 20% Provincial traders 13.33M National traders and wholesalers 53.21M 96% to furniture 4% to handicrafts 99% 1% 100% Retailers 0.54M 35% to furniture 65% to handicrafts 95% Furniture manufacturers 51.27M poles 5% Handicrafts manufacturers 2.48 M pole 53.75M Poles Total 2.4 EMPLOYMENT, DIFFERENTIATING AMONG PERMANENT, SEASONAL, FORMAL, INFORMAL, AND GENDER ROLES Rattan gathering is a part-time, primarily dry-season job, dominated by men, although the number of female gatherers has been increasing. The rattan permits also limit the amount of gathering, as many gatherers would like more opportunities to gather rattan legally. Rattan gathering contributes 20 to 30 percent of the total household income of a gatherer. Agricultural production provides gatherers with food, whereas the cashbased needs of the family are met through their rattan earnings. Kapatas and permittees work part-time schedules and have both male and female workers. Gatherers and kapatas are considered informal actors, whereas the permittees are considered formal actors and are registered with the government. Rattan traders have permanent, formal jobs as they stockpile inventory during the dry season collection period and sell supplies throughout the year to the manufacturers. Both men and women traders are found throughout the Philippines. The manufacturing actors are mixed between permanent employment and part-time subcontracting. The furniture industry is currently composed of 15,000 establishments with 480,000 direct workers and 300,000 others indirectly employed as subcontractors. Manufacturing is dominated by small and medium-sized enterprises (SMEs). Single proprietorships and family corporations are common. It is one of the few export industries in the country that is predominantly Filipino owned. The respondents indicated that the number of indirect workers per subcontractor doubled in 2003 from the previous year. Each subcontractor averages 38 to 50 part-time workers. The respondents also observed a 2:1 ratio for male and female workers. A larger manufacturer may subcontract as much as 80 percent of their total production, but once product demand drops subcontractors are the first to be affected with the loss of job orders. Employment in a manufacturing firm is the most regular and full-time among the groups of rattan workers. FRAME: PHILIPPINES RATTAN VALUE CHAIN STUDY 7
2.5 DESTINATION AND CONCENTRATION OF SALES AMONG MAJOR BUYERS AND TYPES OF BUYERS It is estimated that 80 to 90 percent of raw rattan poles go into exported furniture. A decade ago when cheap, low quality furniture started to flood exports markets from China and Indonesia, the Philippines successfully positioned its furniture with customers who care more about quality and fashion than price. The Philippines enjoys having skilled craftsmen who are reputed to be among the world’s best. Through excellent design flair, the Philippines is considered to be a trendsetter among furniture-producing countries in Asia earning the title “Milan of Asia.” This strategy has not been as successful in the past few years. One Cebu-based manufacturer explained that foreign buyers are now shunning rattan in favor of other materials. Simply put, rattan is not as fashionable as it used to be and has lost its appeal among rich aficionados due to the cheapening of rattan furniture, which can be found in so many lower priced retail outlets in the West. Table 1 shows the main export destinations for Philippines furniture. Table 1: Main Export Destinations of Philippine Furniture (US$1000s)* Country Year 2002 Percentage United States 210,028 66.5 Japan 20,063 6.3 United Kingdom 8,671 2.7 Australia 6,549 2.1 Saudi Arabia 6,250 2.0 France 6,001 1.9 Netherlands 5,611 1.8 Other countries 52,842 16.7 TOTAL 316,015 100.0 * These are overall furniture sales, which include rattan, mixed media with rattan, and nonrattan. Rattan as a contribution to overall furniture is about 45 to 50 percent. Although the value per unit of rattan furniture has increased, the Philippines overall has had diminishing market share. The Philippine world market share is 0.4 percent compared with China’s 12.6 percent. During the 1980s, the country was the largest exporter of furniture in Southeast Asia. Today, the country ranks a poor fifth among Southeast Asian countries behind Malaysia, Indonesia, Thailand, and Vietnam. Furniture ranks seventh among the Philippines’ nontraditional exports. The Philippines’ domestic sales of rattan furniture have generally been cheap, lower-quality furniture, given most Filipinos cannot afford the high-end designs. The best quality rattan poles flow to export furniture production that reinforces the low quality of domestically available furniture. 2.6 PRICE STRUCTURE Table 2 gives an overview of the price structure including selling prices, expenses, and margins for the major rattan market actors. Table 2: Margins, Prices, and Expenses by Major Actors (pesos per pole) Actor Margin Selling Price Expenses* Gatherers 10 10 0 Kapatas 0.60 12 11.40: Made up of pole (10), post-harvest processing (0.80), local taxes (0.60) Permittees 0.42 14.61 14.19: Made up of pole (10), forest charges (3.39), post-harvest processing (0.80) Provincial traders 1.75 16.50 14.75: Made up of pole (12), local taxes (1.20), transport and warehousing (1.50), SOP (0.05) National traders 4.10 26 21.90: Made up of pole (16.50), transport (4.77), warehousing (0.62), SOP (0.02) Retailer 7.53 30 22.47: Made up of pole (20), retailing (0.47), admin expenses (1.99), SOP (0.01) Manufacturer 14.05 75 60.95: Made up of pole (30), production and admin (30.95) *Expenses do not include time invested by the player. SOP is standard operating procedures, Philippine term for bribes and unofficial payoffs made throughout the chain to conduct business. 8 FRAME: PHILLIPINES RATTAN VALUE CHAIN STUDY
Page 1 and 2: FRAME PHILIPPINES RATTAN VALUE CHAI
Page 3 and 4: CONTENTS Executive Summary ........
Page 5 and 6: 1. INTRODUCTION 1.1 RATTAN Rattan i
Page 7 and 8: 2. STRUCTURE AND OPERATION OF THE R
Page 9: number of intermediaries and is due
Page 13 and 14: 3. ANALYZING THE NATURE, WEALTH, AN
Page 15 and 16: of biodiversity-rich forest ecosyst
Page 17 and 18: The manufacturing industry needs go
Page 19 and 20: 3.2.2 LIVELIHOOD ISSUES (PERCENT OF
Page 21 and 22: time delivery. In this scenario, ga
Page 23 and 24: community rattan gatherers are indi
Page 25 and 26: through market expositions and inve
Page 27 and 28: Furniture Industries Foundation (CF
Page 29 and 30: 5.2.1.5 ACTIVITIES THAT SUPPORT CRE
Page 31 and 32: 5.2.3 HORIZONTAL LINKAGES 5.2.3.1 C
Page 33 and 34: institution that assists the indust

PHILIPPINES RATTAN VALUE CHAIN STUDY - About the Philippines

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